The research objective is to describe how memory operates in helping adults understand and remember descriptions of human actions and interactions. These abilities are central to social cognition and adaptation. Three interrelated perspectives on narrative understanding will be investigated: (1) the way readers or listeners understand a human drama by explaining the characters' actions in terms of their goals and plans, as these occur as part of narrative schema which require goals, complications, actions, and resolutions; (2) how readers use attribution rules to infer the motives and causes of actions from the narrative situation and the nature of the actor, with memory biased so as to serve the interests of the reader and the story-character he identifies with; and (3) the way readers assimilate and elaborate a text using their schematic knowledge of common situations and activity scripts. The unifying metaphor is that readers act like intuitive psychologists, trying to understand characters' actions according to their fitting into a plan to achieve a plausible goal, trying to understand the source of goals and relationships among conflicting goals and competing plans. We hypothesize that readers use their intuitive theory of intentional action to make strong goal-based predictions about what types of events will occur in a story. These predictions influence how readily particular narrative events will be understood. Also, narrative elements that fit into major constituents of the narrative schema, such as complication and resolution, will be judged as more important, will occur in summaries and be recalled more than schema-irrelevant material. We will also refine and test schema theory by examining the properties of new, arbitrary schemas we have people learn. This research combines interests of memory theory, natural language understanding systems, and social psychology.